Market Rises After Fed Keeps Interest Rates Unchanged

United States stocks rose on Wednesday after the Federal Reserve left interest rates unchanged and indicated that it would raise rates more gradually than it had envisioned last year.

The market had been lower before the Fed released its statement, which highlighted strength in hiring and housing but weakness in exports and concerns over slower global economic growth.

The Fed now expects to raise interest rates two times this year instead of four.

Jeremy Zirin, chief equity strategist for UBS Wealth Management Americas, said the Fed and the markets now seemed to have the same view on interest rate increases, and that meant the market might be a little less volatile.

“It probably eases investors’ minds that we’re unlikely to see a rate increases in April, and it probably takes June off the table,” he said.

Lower rates help lift economic growth by reducing borrowing costs and reducing the risk associated with expanding businesses or starting new ones. Lower rates also make stocks look more attractive to investors.

Stocks are now on track for their fifth straight week of gains, and the Dow Jones industrial average and Standard & Poor’s 500-stock index closed at their highest levels of the year.

Crude rose after a group of major energy-producing nations said they would hold more talks next month about a freeze in oil output levels. A deal — far from a sure thing — could help relieve a supply glut that has depressed prices.

Benchmark United States crude rose $2.12 to settle at $38.46 a barrel in New York. Brent crude rose $1.59, or 4.1 percent, to settle at $40.33 a barrel.

After the Fed’s decision, bond prices rose sharply and the yield on the 10-year Treasury note fell to 1.91 percent from 1.97 percent. The euro rose to $1.12 from $1.11 late Tuesday. The dollar fell to 112.55 yen from 113.11 yen.

Mining and materials companies and technology stocks, which would all benefit from a weaker dollar, also traded higher. Newmont Mining rose $1.18, or 4.5 percent, to $27.55 and Alcoa added 58 cents, or 6.3 percent, to $9.74. Apple rose $1.39, or 1.3 percent, to $105.97 and Microsoft gained 76 cents, or 1.4 percent, to $54.35.

Metals prices were little changed. Gold lost $1.10, to $1,229.30 an ounce. Silver decreased 4 cents, to $15.22 an ounce. Copper remained at $2.23 a pound.

Shares of Peabody Energy, the largest coal mining company in the United States, plunged after it said it was delaying an interest payment and might have to file for Chapter 11 bankruptcy protection. The stock sank $1.82, or 45.4 percent, to $2.19.

Stocks have been rising in recent weeks on mounting evidence that the United States economy remains in good shape over all despite the shaky state of other major economies.

That trend continued on Wednesday as the Labor Department said core inflation, which does not include energy and food prices, rose further. It is up 2.3 percent over the last year, its biggest 12-month gain since May 2012. Overall inflation fell in February because of lower gas prices, and it is up just 1 percent in the last year.

The Fed has been looking closely at inflation as it considers raising interest rates. Though one of the Fed’s main goals is to prevent runaway inflation, it wants to see inflation rise more than it has in recent years to make sure the economy is healthy enough to handle higher rates.

Separate reports showed construction of new homes increased further in February, but applications were weak again, a sign of future trouble.

United States factories made more machinery, appliances and computers in February. It is the second straight monthly increase and a sign manufacturing is improving.